A steady week for sterling | Smart Daily Currency Note

Sterling

Sterling has had a generally strong week. After a confident end to the previous week, some traders felt that Sterling had been over-bought which caused prices to drop on Monday. This slide was then countered on Tuesday as retail sales, as well as industrial and manufacturing output figures, showed better than expected results. Markets reacted with an injection of confidence and a belief that the UK might avoid a triple-dip recession. Yesterday saw sterling climb marginally against the US Dollar, the most it had advanced against its American counterpart in seven weeks, in reaction to the Debt Management Office selling off £1.6 billion worth of inflation-linked gilts. It is a fairly quiet day for data out of the UK, but with the Eurogroup and ECONFIN meetings taking place alongside a busy day for data in the US, there is still the potential for a lot of volatility. Get in touch to see if sterling’s rally against the US dollar will continue.

Euro

The euro has made a steady recovery this week and has showed strength against both sterling and the US dollar whilst climbing to a peak of three years against the Japanese yen. A commitment from Russia to restructure their 2.5 billion euro loan to Cyprus and better than expected French manufacturing data this week have both contributed to the single currency making up some of the ground that was lost following the escalation of events in Cyprus. More positivity came from the bond markets where the Spanish 10-year bond yield hit its lowest level within the same time frame and the yields on Italian debt also fell. Industrial production data from the Eurozone is being released today and more importantly we see the start of a two-day Eurogroup meeting, which may give some hints regarding development of the economic policies of the 17 nations. Call in now for live rates and up to date information.

US dollar

The US dollar had a poor week, struggling against most of its peers following the terrible labour data out of the US last week. Furthermore, with global risk appetite increasing the US dollar was sold off against all bar the Japanese yen. Positive unemployment claims data released yesterday helped calm the markets following the worse than expected labour data from last week, with some economists suggesting that it was just a blip in what has otherwise been a strong recovery for the labour market. The main focus this week was on the Federal Open Market Committee meeting minutes which supported expectations that we could see an end to a cycle of bond buying this year if the labour market continues to improve. Today we have core retail sales and inflation data emerge which will be sure to have an effect on the markets, so call your trader now to see the impact on prices and the latest developments.

Worldwide

Elsewhere, the Japanese yen has continued to slide against all of its major counterparts, including dropping to five year lows against the Australian and New Zealand dollars. Moreover, the Governor Bank of Japan was speaking overnight and we will continue to see the markets react as traders scrutinize what was said. Commodity backed currencies have gained momentum over the course of the week as global risk appetite drove much of the foreign exchange market; in no small part thanks to strong lending figures emanating from China, suggesting their new Government is keen to shore up their financial sector as a priority. This has proved to have a beneficial effect on the Australian Dollar especially – serving to dilute the country's disappointing March employment report. Call in to see how this influences prices throughout the day.